'We interrupt your vacation fun for this important announcement...'

Recently I had the pleasure of spring skiing for three days in the scenic Lake Tahoe area. In almost all ways it was a completely enjoyable and positive experience. The snow was good, the lift lines non-existent, and the sun was shining (most of the time).

I gained useful and valuable tips in the lesson I took on the first day we spent at Squaw Valley. The best payoff from a lesson is practicing and seeing if you can apply what you've learned. Our second day was spent at nearby Alpine Meadows, another large and excellent facility. My time at Alpine Meadows, however, was slightly diminished by what you might call a gratuitous and incongruous distraction.

If you've ever been skiing you're familiar with riding on the chair lifts. Moving cables take the attached chairs up the slopes at about five miles an hour. The cables are held aloft by lift towers roughly 200-300 feet apart.

On the lift towers at Alpine Meadows are attached signs conveying the following fascinating bits of information: "Milk cartons take five years to decompose," "Plastic six-pack beverage holders take fifty years to decompose," "Aluminum cans take fifty years to decompose, "Leather takes five years to decompose," and "Styrofoam never decomposes." There were about a dozen other messages along the same theme, but you get the idea.

These informational gems raised a number of questions in my mind: Why are they telling me this? What am I supposed to do with this information? What led them to believe that a ski resort is an appropriate venue to educate people about relative durations of decomposition? Is the fact that it takes five years for a milk carton to decompose a good thing or a bad thing? Is that too fast or too slow? Since Styrofoam never decomposes, should I avoid it like the plague? If I need to be educated (or re-educated) why do they assume it's about waste management?

You and I could both at least guess about some possible answers. One purpose of the signs is to take advantage of a captive audience to enlist them in the great recycling crusade, whether or not they actually want to be enlistees. What kind of reaction are they hoping to generate? Remorse, despair, indignation, resolve, I'm not sure.

Skiing could be considered a somewhat decadent activity. It's not cheap. Lift tickets typically cost $60-$80. Renting skis, boots, and poles is another $50, about the same for a snow board and boots. A group lesson is $50, a private one is $120. Lodging adds another $100-$300 a night. For a family, it can be a very expensive weekend.

The patrons might be feeling guilty about how much fun they're having. They're probably a good "target of opportunity" for making them feel guilty about their selfish and profligate use of resources. The implicit message is "Don't go enjoying yourself too much, your lifestyle is generating residue that takes too long to decompose."

I've seen information posted on ski towers many times before, but it's always been relevant to skiing safety or courtesy, "Stay within designated boundaries," for example.

The primary purpose of a ski resort, I assume, is to make a profit by making it possible for people to have fun. Why compromise that experience? Why spoil the fun? I doubt that it's in the best interests of the resort owners. When I go someplace for recreation or entertainment it would be nice if that were the exclusive focus of the proprietors.

I imagine most readers of these signs don't react as I have. They're just the kinds of statements you commonly see these days. They're not exceptional or unexpected. For all I know other skiers might be fascinated by decomposition trivia.

My frustration, of course, is not really with the owners and management of a particular ski resort, but rather with the cultural climate that spawns such intrusive and annoying nonsense. It's a climate that gives far too many people a license to nag. ____________________

◼ 'We interrupt your vacation fun for this important announcement...'

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

President Incompetent

American Thinker: President Incompetent http://bit.ly/crGZg9 // Ross nails it with this piece.

— Win 2016 (@win2016) February 18, 2010

_______________________

Whether or not you support President Obama's policies, one thing is becoming increasingly obvious: He simply lacks competence. The best indicator of this is his ineffectiveness in accomplishing any of his own objectives. His first year in office resembles the career of a quarterback who never completes a pass. His list of failures is all too familiar -- health care reform, closing Guantánamo, cap-and-trade, and so on. He has failed to accomplish any of his self-identified top priorities. Other than getting himself elected, he appears to have a very limited range of abilities.

For conservatives, the president's incompetence is a mixed blessing. Conservatives are breathing sighs of relief that health care reform and cap-and-trade have crashed and burned. For his supporters, his ineffectiveness must be painful to watch.

Nevertheless, the fact that the most powerful man in the world is incompetent does not make for a good situation. Unfortunately, he is in a position to do major damage, and he has, in fact, already done so. His poorly conceived economic policies have unnecessarily prolonged and deepened the recession. His foreign policy missteps have jeopardized our national security.

The frequency of the apologies and backtracks the president and his cabinet have had to make demonstrates that they don't seem to think before they speak or act. The president likes to make promises but seems to have no serious intention to actually deliver on them. Almost immediately after taking office, he promised to close Guantánamo. Doing so is obviously a much more complicated and difficult undertaking than he envisioned. As George H. W. Bush discovered, there's no such thing as a free promise. Bush's broken promise not to raise taxes cost him a second term.

Mr. Obama is also ineffective in helping fellow Democrats win elections. Unless his success rate improves, he will earn the title of "the biggest loser." Democrat candidates this year may well be telling him "thanks but no thanks."

The president is not a good strategist. He is not a good judge of probabilities. He has a tendency to pick fights he has little or no chance of winning. It almost appears that he likes losing.

Competence is mainly an issue for leaders of democratic countries. A dictator does not necessarily need to worry about it. A dictator gets things done through brute force, which is also the way he maintains his power. The citizenry pays a price for his incompetence, but the dictator himself does not.

Mr. Obama has surrounded himself with similarly incompetent personnel. Ann Coulter has described Joe Biden as "Obama's assassination insurance." A president's press secretary is his public spokesman and primary interface with the press. You have to wonder what possessed Obama to hire someone like Robert Gibbs for that position. Mr. Gibbs is not an impressive persona, to put it mildly. Numerous other cabinet members have also been an embarrassment.

Most of Mr. Obama's supporters have yet to admit that he is incompetent. It's becoming increasingly obvious, however, and they can't be happy with his lack of results. The evidence of his incompetence is bound to accumulate further, and denial will be increasingly hard to maintain.

If anyone is surprised by Mr. Obama's incompetence, you have to wonder why. When he was running for the presidency, on what basis would anyone have assumed that he was competent? He had about the thinnest resume of anyone who had ever run for the office, with virtually zero executive experience. He really was the "hope" candidate, elected by voters relying on hope rather than evidence or common sense.

Election results in New Jersey, Virginia, and Massachusetts demonstrate that many voters are suffering from buyer's remorse. Unfortunately, they have three years left on an unbreakable purchase contract.

What is the probability that Mr. Obama will "grow in office" and develop competence? It's not high. After the president gratuitously trashed his city for the second time, the mayor of Las Vegas, Oscar Goodman, observed that "the president is a real slow learner."

Mr. Obama seems to be immune to feedback. In fact, he brags about his stubbornness and refusal to give up on Obamacare in the face of overwhelming public disapproval and the high cost of prolonging a hopeless endeavor. The change candidate is himself unwilling to change.

Although Mr. Obama's incompetence will persist, other important corrective steps are already underway. Conservatives are more energized and motivated now than perhaps at any time in memory. We may very well see a Democrat electoral bloodbath in November. Judging from how much fun Scott Brown's victory was for conservatives, it could be a time to cherish. _______________________

This article originally ran on American Thinker. Ron Ross Ph.D. is an economist and author of The Unbeatable Market.

Don't Blame Reagan

Today's California seems to hate the private sector. And vice versa.

◼ Don't Blame Reagan - Ron Ross/North Coast Journal

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, "What are you guys going to do out there?"

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question -- why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I've seen presented many times over the past few years.

Jones and Redmond assert that "opposition to taxes is now deeply embedded in the California electorate." Their lament, essentially, is that we are in this predicament because taxes aren't high enough. Granted, primarily because of Prop 13, California's property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as "a Republican landlord lobbyist") and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of "The Wealth of Nations" in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

It apparently doesn't occur to the authors that the kinds of liberal and progressive policies they advocate might have played in California's decline. Because they refuse to look inward or take any accountability, they can only conjure up strained explanations as to why someone else must be to blame. All the state's problems are caused by the ghosts of three dead white guys (Reagan, Jarvis and Friedman).

California's fundamental problem is its anemic economic growth rate. Our state has the fourth highest unemployment rate (12.2 percent) and the second highest home foreclosure rate. Is California in such relatively bad shape because its citizens are not taxed enough? That doesn't make sense.

The opposite is much closer to the truth. Because of high taxes and irrationally burdensome regulations, California is near the top of the list in regard to hostility toward business. According to a ranking by the Small Business and Entrepreneurship Council, only New Jersey has a more business-unfriendly environment. Californians can, if they choose, burden businesses with ever more demands and regulations. They pay a high price, however. Choices have consequences. Intel Corporation, the chip manufacturer that started in California, announced earlier this year that it would be investing $7 billion in new manufacturing facilities over the next two years -- in Oregon, Arizona and New Mexico. There's a pattern there. Are they avoiding California because our taxes are too low?

Jones and Redmond recognize the negative effects of the kinds of policies they espouse. "Certainly, turning over more public resources to free market capitalists, cutting taxes and slashing government regulation will spur private sector economic growth, just as advocates claim. But that growth has a cost. The wealth won't be shared by everyone." Their argument essentially says there's no point in creating wealth if it's not equally distributed.

In other words, if the beneficial impacts of some policy are not equally shared by everyone, they must be rejected. Such a standard creates an absolutely impossible hurdle for any human action. For Redmond and Jones, income equality is more important than economic growth. I have never understood those kinds of priorities. The damage done by unemployment is a real and unrecoverable loss. Ironically, it also hurts government revenues and, in the end, those citizens who depend on government-funded programs. If Redmond and Jones really want more money flowing into state coffers they should be welcoming policies that encourage economic vitality.

Jones and Redmond regret that corporations don't pay as much taxes as they should, partly because of Prop 13. The fantasy that corporations are capable of paying taxes is one of the most naïve beliefs of the left. In the real world, the world all of us actually live in, only humans are capable of paying taxes. Corporations are only intermediaries. They can write the checks to the IRS or the Franchise Tax Board, but they can't bear the "burden" of taxes any more than cows or real estate can.

Corporations connect with humans in three ways -- owners, employees and customers. The burden of corporate taxes falls on some combination of those three groups. Corporate taxes result in some combination of reduced profits for shareholders, higher prices for customers and lower wages for employees. The actual distribution of the effects varies from industry to industry, case to case. The conclusion of most recent research indicates that the principal burden falls on the employees of corporations. If your objective is to soak the rich, the corporate tax is an extremely crude and counterproductive means for doing so. Many on the left despise corporations and have no interest in actually analyzing their policies, so the corporate tax is one of their favorite weapons of choice.

California will survive and we will muddle through somehow. Unfortunately, we are squandering our vast potential by misreading the fundamental sources of our chronic problems.

_________________

This article originally ran in the North Coast Journal. October 29, 2009

Today's California seems to hate the private sector. And vice versa.

◼ Don't Blame Reagan - North Coast Journal

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, "What are you guys going to do out there?"

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question -- why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I've seen presented many times over the past few years.

Jones and Redmond assert that "opposition to taxes is now deeply embedded in the California electorate." Their lament, essentially, is that we are in this predicament because taxes aren't high enough. Granted, primarily because of Prop 13, California's property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as "a Republican landlord lobbyist") and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of "The Wealth of Nations" in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

It apparently doesn't occur to the authors that the kinds of liberal and progressive policies they advocate might have played in California's decline. Because they refuse to look inward or take any accountability, they can only conjure up strained explanations as to why someone else must be to blame. All the state's problems are caused by the ghosts of three dead white guys (Reagan, Jarvis and Friedman).

California's fundamental problem is its anemic economic growth rate. Our state has the fourth highest unemployment rate (12.2 percent) and the second highest home foreclosure rate. Is California in such relatively bad shape because its citizens are not taxed enough? That doesn't make sense.

The opposite is much closer to the truth. Because of high taxes and irrationally burdensome regulations, California is near the top of the list in regard to hostility toward business. According to a ranking by the Small Business and Entrepreneurship Council, only New Jersey has a more business-unfriendly environment. Californians can, if they choose, burden businesses with ever more demands and regulations. They pay a high price, however. Choices have consequences. Intel Corporation, the chip manufacturer that started in California, announced earlier this year that it would be investing $7 billion in new manufacturing facilities over the next two years -- in Oregon, Arizona and New Mexico. There's a pattern there. Are they avoiding California because our taxes are too low?

Jones and Redmond recognize the negative effects of the kinds of policies they espouse. "Certainly, turning over more public resources to free market capitalists, cutting taxes and slashing government regulation will spur private sector economic growth, just as advocates claim. But that growth has a cost. The wealth won't be shared by everyone." Their argument essentially says there's no point in creating wealth if it's not equally distributed.

In other words, if the beneficial impacts of some policy are not equally shared by everyone, they must be rejected. Such a standard creates an absolutely impossible hurdle for any human action. For Redmond and Jones, income equality is more important than economic growth. I have never understood those kinds of priorities. The damage done by unemployment is a real and unrecoverable loss. Ironically, it also hurts government revenues and, in the end, those citizens who depend on government-funded programs. If Redmond and Jones really want more money flowing into state coffers they should be welcoming policies that encourage economic vitality.

Jones and Redmond regret that corporations don't pay as much taxes as they should, partly because of Prop 13. The fantasy that corporations are capable of paying taxes is one of the most naïve beliefs of the left. In the real world, the world all of us actually live in, only humans are capable of paying taxes. Corporations are only intermediaries. They can write the checks to the IRS or the Franchise Tax Board, but they can't bear the "burden" of taxes any more than cows or real estate can.

Corporations connect with humans in three ways -- owners, employees and customers. The burden of corporate taxes falls on some combination of those three groups. Corporate taxes result in some combination of reduced profits for shareholders, higher prices for customers and lower wages for employees. The actual distribution of the effects varies from industry to industry, case to case. The conclusion of most recent research indicates that the principal burden falls on the employees of corporations. If your objective is to soak the rich, the corporate tax is an extremely crude and counterproductive means for doing so. Many on the left despise corporations and have no interest in actually analyzing their policies, so the corporate tax is one of their favorite weapons of choice.

California will survive and we will muddle through somehow. Unfortunately, we are squandering our vast potential by misreading the fundamental sources of our chronic problems.

Many Questions, Few Answers

◼ Many Questions, Few Answers - North Coast Journal

There are many reasons why support for President Obama's health care plan has declined as the details have become clearer. I suspect that Mr. Obama and his advisors were afraid this would happen. That's probably why they wanted to rush it through Congress (even though most of its provisions don't become effective until 2013).

Their central dilemma is this -- voters want more than vague outlines of what Obamacare will mean to them. Unfortunately for reform proponents, however, whenever there is talk about specifics a firestorm of controversy and partisan division erupts. In other words, the proponents can't be vague and they can't be specific.

In his campaign for the presidency Mr. Obama did an excellent job of selling himself, but he has failed to truly sell anything else. It's becoming clear he is not a good salesman, teacher, or persuader. He has attempted to sell what's unbelievable. That's not good salesmanship. If I were one of his supporters I would be extremely frustrated with him. The recurrent problem with selling Obamacare is that there are far too many aspects that, to put it mildly, strain credulity.

The so-called "public option" is a prime example of why everyone ought to be extremely skeptical of Obamacare. In a Labor Day speech the president said "I continue to believe that a public option will improve quality and bring down cost." On an almost daily basis, however, the public option has been an on-again-off-again proposition. This might cause a person to wonder, is it important or isn't it? In his speech to the joint session of Congress Mr. Obama said that the public option is simply "a means to an end."

Although none of the specifics of Obamacare are clearly defined, the idea behind the public option is that it would supposedly be a way to add a new kind of competitive pressure to private health insurance companies. The public option would be a new government-run, government-owned health insurance company.

I've been studying economics for almost 50 years. I have never before heard of anything vaguely resembling the case being made for the public option. I would be interested to see an example of a government-run, government-owned institution that puts competitive pressure on private companies, causing them to provide lower prices and better service. Is it the existence of the U.S. Postal Service that causes UPS and FedEx to keep costs low and service high? Where are the examples of government institutions being run more efficiently than private companies? The experience most people have is just the opposite.

There are already well over a thousand health insurance companies in existence. It would be hard to argue that our health insurance problems stem from a lack of competition. In some states there are only a handful of available companies. That's primarily the result of burdensome regulations, mandates and limits on interstate competition. Economists have called competition the "patron saint of consumers." More competition is definitely a good idea, but attempting to make the government a competitor is a weird way to accomplish that objective.

I have no idea where this totally novel idea came from or why anyone thinks it would work. It's an idea I had never even heard of until a few months ago. Nevertheless, it has become a make-or-break issue for many Obamacare proponents. The proponents need to explain exactly how it would work and why it is of such paramount importance.

Would this new government-run health insurance agency be self-supporting? If it had access to public funds, how could private companies compete with it? It would not be a level playing field. The president has told us repeatedly that if we're satisfied with our current health insurance, we can keep it. If a subsidized public option drives most private insurers out of business, however, that option will go away. The main reason there are so few private schools is that they have to compete with public schools that provide a similar product free of charge.

The public option is a totally untested shot-in-the-dark. It is perhaps the best indicator that Obamacare proponents are willing to overhaul one-sixth of the economy on little more than a wing and a prayer. At this point the public option could be described as a "faith-based" proposal.

Mr. Obama and other Democrats have said many times that their preferred version of health care reform is the so-called "single payer" system similar to what Canada, Britain and France now have. They recognize that, at this point, however, a single-payer system is a political impossibility. It's that reality that is the real impetus behind the public option.

Whenever the public option itself begins to look like a political dead end, they run some other half-baked idea up the flagpole. "May I offer you single payer? Not interested? Would you buy a public option? No? Would you buy a health insurance co-op? Not that either? Could I interest you in a public option trigger? No? Surely, then, you could agree to an insurance exchange." They're beginning to look silly, desperate and floundering -- more like a Saturday Night Live skit than someone wanting to redesign a sixth of the economy. Do we really want a comedy team in charge of our health care?

Another example of the too-good-to-be-true nature of Obamacare is Mr. Obama's promise that it will reduce the overall cost of health care and will not add to our already massive deficit. There are obvious reasons why much of the public is not buying that claim.

We're told repeatedly that there are 47 million Americans without medical insurance and because of that they are receiving inadequate medical care. (In his speech to the joint session of Congress Mr. Obama put the number at 30 million uninsured Americans.) The dilemma is you can't improve the medical care for 47 million (or even 30 million) people without spending large amounts of money.

As much as they might like to, politicians cannot repeal the laws of supply and demand. If demand is increased significantly, there will be upward pressure on prices. Lawmakers can attempt to cap prices if they want, but that will only lead to shortages. Improving the health care for millions of new people will require a significant increase in the number of health care professionals. How is that going to be accomplished? How is going to be paid for?

Mr. Obama has also assured us that his plan will not lead to rationing. That is another impossible promise. In one form or another, every economic good has to be rationed. There is no good or service that can be available to everyone in unlimited quantities. The rationing device we rely on in most cases is the price system. Flexible prices balance supply and demand. If you choose not to rely on the price system some other rationing mechanism has to be put in its place.

Remaking the health care sector is probably the biggest domestic issue ever undertaken by the government. Something that massive and historic should only be attempted after careful analysis as well as deliberate, serious, and open debate. Mr. Obama has not had discussions with Republican lawmakers since April. He has taken a "my way or the highway" attitude. Rather than take alternative proposals seriously and respectfully, he has demeaned and ridiculed anyone who's not on board with his own particular prescription for reform.

One undeniable aspect of government solutions to problems is that the "cures" are extremely inflexible. Technology, our culture and the economy are all changing at an accelerating pace. Even if an answer is right today, it isn't necessarily right tomorrow. Politically imposed rules and bureaucracies all suffer from chronic rigidity. Government imposed regulations necessarily take on a "one size fits all" character. Bureaucracies treat people not as individuals but rather as categories. Is that really the direction we want to go with health care?

Consider, for example, how the federal government attempted to deal with agricultural problems in the early years of the Depression. Their "solutions" were based on what we now realize was a complete misreading of the underlying problems. Nevertheless, their ill-advised programs are still with us more than 75 years later. There have been numerous attempts by presidents from both parties to end or modify such programs as agricultural price supports, all to no avail.

Creating a whole new set of rules that will significantly change one-sixth of our economy is an undertaking far more difficult than the advocates of health care reform seem to grasp. Neither Mr. Obama nor the congressmen involved are experts on the health care industry.

Politicians have a fatal urge to oversimplify reality. Problems and shortcomings of our health care system are exceedingly complex with an endless list of origins. Politicians arrogantly assume that in a relatively short period of time they can design solutions that will make the whole system function more efficiently. Whatever "solutions" they impose on a complex system will make some problems better and some problems worse. More often than not, politically imposed "solutions" create far more problems than they eliminate.

Ron Ross Ph.D. is an investment advisor at Premier Financial Group in Eureka and author of The Unbeatable Market.

Many Questions, Few Answers

◼ Many Questions, Few Answers

There are many reasons why support for President Obama's health care plan has declined as the details have become clearer. I suspect that Mr. Obama and his advisors were afraid this would happen. That's probably why they wanted to rush it through Congress (even though most of its provisions don't become effective until 2013).

Their central dilemma is this -- voters want more than vague outlines of what Obamacare will mean to them. Unfortunately for reform proponents, however, whenever there is talk about specifics a firestorm of controversy and partisan division erupts. In other words, the proponents can't be vague and they can't be specific.

In his campaign for the presidency Mr. Obama did an excellent job of selling himself, but he has failed to truly sell anything else. It's becoming clear he is not a good salesman, teacher, or persuader. He has attempted to sell what's unbelievable. That's not good salesmanship. If I were one of his supporters I would be extremely frustrated with him. The recurrent problem with selling Obamacare is that there are far too many aspects that, to put it mildly, strain credulity.

The so-called "public option" is a prime example of why everyone ought to be extremely skeptical of Obamacare. In a Labor Day speech the president said "I continue to believe that a public option will improve quality and bring down cost." On an almost daily basis, however, the public option has been an on-again-off-again proposition. This might cause a person to wonder, is it important or isn't it? In his speech to the joint session of Congress Mr. Obama said that the public option is simply "a means to an end."

Although none of the specifics of Obamacare are clearly defined, the idea behind the public option is that it would supposedly be a way to add a new kind of competitive pressure to private health insurance companies. The public option would be a new government-run, government-owned health insurance company.

I've been studying economics for almost 50 years. I have never before heard of anything vaguely resembling the case being made for the public option. I would be interested to see an example of a government-run, government-owned institution that puts competitive pressure on private companies, causing them to provide lower prices and better service. Is it the existence of the U.S. Postal Service that causes UPS and FedEx to keep costs low and service high? Where are the examples of government institutions being run more efficiently than private companies? The experience most people have is just the opposite.

There are already well over a thousand health insurance companies in existence. It would be hard to argue that our health insurance problems stem from a lack of competition. In some states there are only a handful of available companies. That's primarily the result of burdensome regulations, mandates and limits on interstate competition. Economists have called competition the "patron saint of consumers." More competition is definitely a good idea, but attempting to make the government a competitor is a weird way to accomplish that objective.

I have no idea where this totally novel idea came from or why anyone thinks it would work. It's an idea I had never even heard of until a few months ago. Nevertheless, it has become a make-or-break issue for many Obamacare proponents. The proponents need to explain exactly how it would work and why it is of such paramount importance.

Would this new government-run health insurance agency be self-supporting? If it had access to public funds, how could private companies compete with it? It would not be a level playing field. The president has told us repeatedly that if we're satisfied with our current health insurance, we can keep it. If a subsidized public option drives most private insurers out of business, however, that option will go away. The main reason there are so few private schools is that they have to compete with public schools that provide a similar product free of charge.

The public option is a totally untested shot-in-the-dark. It is perhaps the best indicator that Obamacare proponents are willing to overhaul one-sixth of the economy on little more than a wing and a prayer. At this point the public option could be described as a "faith-based" proposal.

Mr. Obama and other Democrats have said many times that their preferred version of health care reform is the so-called "single payer" system similar to what Canada, Britain and France now have. They recognize that, at this point, however, a single-payer system is a political impossibility. It's that reality that is the real impetus behind the public option.

Whenever the public option itself begins to look like a political dead end, they run some other half-baked idea up the flagpole. "May I offer you single payer? Not interested? Would you buy a public option? No? Would you buy a health insurance co-op? Not that either? Could I interest you in a public option trigger? No? Surely, then, you could agree to an insurance exchange." They're beginning to look silly, desperate and floundering -- more like a Saturday Night Live skit than someone wanting to redesign a sixth of the economy. Do we really want a comedy team in charge of our health care?

Another example of the too-good-to-be-true nature of Obamacare is Mr. Obama's promise that it will reduce the overall cost of health care and will not add to our already massive deficit. There are obvious reasons why much of the public is not buying that claim.

We're told repeatedly that there are 47 million Americans without medical insurance and because of that they are receiving inadequate medical care. (In his speech to the joint session of Congress Mr. Obama put the number at 30 million uninsured Americans.) The dilemma is you can't improve the medical care for 47 million (or even 30 million) people without spending large amounts of money.

As much as they might like to, politicians cannot repeal the laws of supply and demand. If demand is increased significantly, there will be upward pressure on prices. Lawmakers can attempt to cap prices if they want, but that will only lead to shortages. Improving the health care for millions of new people will require a significant increase in the number of health care professionals. How is that going to be accomplished? How is going to be paid for?

Mr. Obama has also assured us that his plan will not lead to rationing. That is another impossible promise. In one form or another, every economic good has to be rationed. There is no good or service that can be available to everyone in unlimited quantities. The rationing device we rely on in most cases is the price system. Flexible prices balance supply and demand. If you choose not to rely on the price system some other rationing mechanism has to be put in its place.

Remaking the health care sector is probably the biggest domestic issue ever undertaken by the government. Something that massive and historic should only be attempted after careful analysis as well as deliberate, serious, and open debate. Mr. Obama has not had discussions with Republican lawmakers since April. He has taken a "my way or the highway" attitude. Rather than take alternative proposals seriously and respectfully, he has demeaned and ridiculed anyone who's not on board with his own particular prescription for reform.

One undeniable aspect of government solutions to problems is that the "cures" are extremely inflexible. Technology, our culture and the economy are all changing at an accelerating pace. Even if an answer is right today, it isn't necessarily right tomorrow. Politically imposed rules and bureaucracies all suffer from chronic rigidity. Government imposed regulations necessarily take on a "one size fits all" character. Bureaucracies treat people not as individuals but rather as categories. Is that really the direction we want to go with health care?

Consider, for example, how the federal government attempted to deal with agricultural problems in the early years of the Depression. Their "solutions" were based on what we now realize was a complete misreading of the underlying problems. Nevertheless, their ill-advised programs are still with us more than 75 years later. There have been numerous attempts by presidents from both parties to end or modify such programs as agricultural price supports, all to no avail.

Creating a whole new set of rules that will significantly change one-sixth of our economy is an undertaking far more difficult than the advocates of health care reform seem to grasp. Neither Mr. Obama nor the congressmen involved are experts on the health care industry.

Politicians have a fatal urge to oversimplify reality. Problems and shortcomings of our health care system are exceedingly complex with an endless list of origins. Politicians arrogantly assume that in a relatively short period of time they can design solutions that will make the whole system function more efficiently. Whatever "solutions" they impose on a complex system will make some problems better and some problems worse. More often than not, politically imposed "solutions" create far more problems than they eliminate.

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Thhis article originally ran in the North Coast Journal, September 17, 2009 - Ron Ross Ph.D. is an investment advisor at Premier Financial Group in Eureka and author of The Unbeatable Market.

FISCAL FITNESS: A matter of attitude

The beginning of each year is a time when our attention is almost automatically focused toward the future. Even more important than any specific plans we have is our attitude about the future.

I guess I'm an optimist by nature. My blood type, in fact, is B-positive. Nevertheless, whether or not optimism and hope are your natural tendencies, optimism is more logical than pessimism.

Consider the profound questions about the future. Should we be hopeful or fearful about the future of mankind? People are concerned about overpopulation, global warming, loss of species and a long list of similar problems. Many seem to believe that one or another of these problems will lead to our demise.

The threat posed by any one of these problems is debatable. How serious they will be in 25, 50 or 100 years is even more debatable. You can't really know what the future has in store, so essentially you have to make an assumption. Now you can assume that we will create ways to deal with these problems, or assume that we will fail.

Here's where the logic of hope and optimism comes in. Suppose you decide to work on the assumption that mankind will fail to solve the mega-problems. That means that you live your life in some degree of despair.

Even if you live to see your pessimistic prediction come true, there is no payoff. Your prediction came true, but you were probably miserable in anticipation of it. Your only consolation is that you can say, "See, I was right!"

If you're wrong, mankind succeeds. You can breathe a sigh of relief, but much of your own life has been wasted in worry. One of the truest quotes in all literature is "A coward dies a thousand deaths, a brave man dies but once." Couldn't it also be said that a pessimist also "dies a thousand deaths"?

Here's another reason why it makes sense to have hope. Consider two "populations": the population of problems and the population of solutions.

It's clear that as our stock of knowledge and information grows, the population of solutions grows. The more we know about the world -- chemistry, biology, medicine, electronics, physics, psychology -- the greater is our problem-solving ability.

We've learned, for example, that many mental problems are the result of imbalances in blood chemistry. Millions of people have achieved dramatic relief through the use of a growing number of pharmacological treatments. That's just one example of how greater knowledge has reduced human suffering.

On the other hand, what has been happening to the population of problems? Some people tend to think that every new solution creates a new problem. They belong to the "there's-no-hope" school.

Solutions do cause change, and with change there are gains and losses. The clearest and most significant achievement of science and economic growth is our increased life expectancy. This advance, however, has caused Alzheimer's disease to be far more common than it used to be.

I would argue that the population of major problems is almost static, that most of the large problems and challenges of the human condition have been with us for thousands of years.

Besides logic there is also historical support for optimism. Pessimists and doomsayers have been with us throughout history. Every kind of catastrophe imaginable has been predicted and practically none have come to pass. Society keeps on muddling through. Of course, present-day pessimists maintain that "this time it's different." Yeah, right.

One popular doomsayer is Paul Erlich. In his 1968 book, "The Population Bomb," he warned, "The battle to feed humanity is over. In the 1970s the world will undergo famines -- hundreds of millions of people are going to starve to death." Repeatedly, Erlich's predictions have failed to materialize. Strangely, people keep buying his books and listening to what he says.

Pessimism's only real advantages are that, in the short run, it's easier to be pessimistic than optimistic, and cynicism is the cheapest way to act sophisticated.

The greatest damage done by pessimism is what it does to our youth. I'm troubled hearing my own children relate what they learn at school regarding insurmountable problems facing mankind in the future. In most cases I'm sure it's unintentional, but destroying a young person's hope is a terrible, terrible thing to do. As a matter of fact, giving children hope should be one of society's highest priorities.

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◼ FISCAL FITNESS: A matter of attitude - North Coast Journal January 1997

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.