The Congress-Copenhagen Connection

minute-man-2-lithoIn several ways, the future of America will be decided in the next thirty days.  Four events are scheduled that will have a profound effect on the level of freedom and liberty enjoyed by the American people, passage of the 2009 budget; the initial negotiating session in Bonn, Germany on the U.N. “Climate Change” plan;  Domestic legislation on global warming by Congress; and legislation on national health care.  All four have the potential to greatly expand the reach of the federal government, further erode state sovereignty, adversely affect the national economy, and diminish the level of liberty and freedom for citizens.

The Copenhagen Accords

The U.N. plan also threatens the erosion of our national sovereignty.  The first negotiating session for the “Copenhagen Accords” began Sunday, March 29, in Bonn under the auspices of the United Nations.  Goals for the accords are set forth in a sixteen page informational document to be distributed to participants. They are expected to be signed by December 2009. Unlike the Kyoto Accords, indications are that the Copenhagen Accords will have the support of both Congress and the White House.

An editorial in Investor’s Business Daily Saturday, begins with a reference to Czech President Vaclav Klaus who once called global warming “a new religion, a Trojan horse for imposing a global tyranny worse than communism.”

“Details about the Copenhagen Conference prove how right he was”, comments the IBD editor.

The centerpiece of the new accords will be an international “Cap and Trade” scheme that, if implemented, will result in a massive transfer of wealth from advanced industrial nations, particularly the United States, to underdeveloped and developing nations like those in Africa, South and Central America, China and India.  In addition to wealth transfer, the UN’s “informational notes” predicts a major relocation of businesses as companies flee from highly regulated countries to those with fewer regulatory policies.

The two domestic industries hardest hit by the new regulations will be energy and transportation.  Both rely heavily on the use of fossil fuels and they cannot be outsourced.  The costs associated with “cap and trade” and carbon taxes will be passed on to consumers through higher prices.  When added to the inflation caused by the Treasury Department’s printing of trillions of dollars to pay for the Obama economic plan the result is sure to be a lowering of the standard of living for everyone.

There is, however, a ray of hope so far as the UN plan is concerned, assuming that we still have a Constitution in place next year when a treaty is likely to be presented to the Senate for ratification.  Article II, Section 2 of the Constitution requires a two-third majority in order to ratify a treaty. The constitutional requirement for a two-thirds vote in the Senate cannot be set aside with the Reid-Pelosi “reconciliation” plan they intend to use to bypass any attempt to filibuster bills dealing with domestic climate change, energy conservation and healthcare.

A more immediate threat comes from a domestic cap and trade scheme legislated by Congress.  The domestic plan would have all the negative aspects of the UN plan and will probably have popular support among the uninformed voters that make up the major segment of the voting public.  What makes new cap and trade regulations more likely is the fact that many Republican Congressmen and Senators have bought into the pseudo-science of “global warming”.  There is little chance that such a bill could be successfully filibustered, even if the opportunity was given.

There seems to be little we can do other than protest to stop the anticipated legislation on both climate change and healthcare.  Aside from the outrageous spending spree already underway by the federal government, climate change and health care legislation pose the biggest threats we will be facing in the near future.

Eventually we will make the transition from fossil fuel to an alternative—when the time is right. When that happens it will be because of entrepreneurial innovation and consumer demand not because of central planning by the government.  That is always the way progress comes about.  We did not make the transition from the horse and buggy to the automobile because of government initiative, but because of American ingenuity and the free market.  Government interference in the free market always causes dislocation in the economy and results in unforeseen and unnecessary problems for the consumer.  Government can, to a certain extent, affect production through regulations, but it cannot dictate consumption except by trampling on the liberties of its citizens.

Both Climate change legislation and health care legislation are doomed to failure in the long run  because they violate two basic principles of the human condition.

The Problem with Central Planning

Two terms familiar to every business school student are “span of control” and “economy of scale”.  Span of control has to do with the principle that the human mind is limited in its capacity for gathering, absorbing and using information efficiently.  Economy of scale has to do with the consolidation of operations in order to improve efficiency.  The merger craze of a few decades ago brought out the shortcoming of both these theories.

Large companies bought up smaller companies in order to take advantage of the economy of scale only to find that they had stretched the span of control to a point that could no longer be managed effectively. Companies go from acquisition to centralization, to decentralization, to “spin offs” in an effort to find the optimum balance between the span of control and the economy of scale.  Few ever find it, and private businesses have an advantage over government in that they are merit based and motivated by profit.  Governments are politics based and motivated by the desire for power.

Centrally planned economies have never worked, and cannot work, because they always violate the principle underlying “span of control”.  The founders understood this principle well when they drafted the Constitution.  That is one of the reasons why they limited the power and size of the central government and reserved policy decisions affecting the daily lives of citizens to states and local communities.

Health Care

America has the best and most innovative health care system in the world.  It’s artificially high cost is primarily the result of a manufactured demand caused by our third-party payment system created by employer paid health insurance, Medicare and Medicaid. Until we deal honestly with that problem, we cannot solve the problem of unaffordable health care.

The only way to solve the problem of healthcare costs is to allow the market to function.  Add the amount being paid by companies for employee health insurance to employees’ paychecks, return taxes paid for Medicaid and Medicare to the taxpayer and let the taxpayer pay for their own catastrophic health insurance and routine healthcare, “out of pocket”.

When our automobile breaks down we think nothing of paying five hundred or a thousand dollars to get it fixed.  Certainly, our body is more important than our car.  Yet, we have created an expectation that when our body breaks down or develops a temporary “problem” the expense of getting it fixed should be born by someone else.

The expense for indigent health care can and should be born by states, local communities and families, as it once was.  No one should go without needed health care, and they do not today.  The problem is that as the system is now working the cost of  indigent care is born by hospitals and emergency rooms and passed on to other patients through elevated cost for hospital services or to the taxpayer through hospital reimbursements.

The problems caused by government planned and administered healthcare schemes in Canada, England, France, and elsewhere are well documented and widely known.  In spite of this, our politicians are determined to force nationalized health care on everyone, in one form or another.  The inevitable result will be lower standards of care for patients and unsustainable cost to the taxpayers.  Eventually, health care and our arrogant attempts to control climate, unless checked, will result in the demise of capitalism.  If one doesn’t get us, the other one will.

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