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Archive for the ‘Capitalism’ Category

The defense of profits

Posted by Chance on May 21, 2010

In this blog post, the author asks

See, this is why I don’t understand all the right wingers who are against health care reform. The parent company to Anthem Blue Cross made a profit of $877 MILLION dollars. Which was 51% more than last year. At the same time, these marks, wanted to raise premiums. THIS IS THE SYSTEM THAT THE RIGHT WING IS STRIVING TO PROTECT.Yes, this is why I have no respect for the right wing on this issue.

I’ll indulge the author on this issue.  I was going to write a lengthy rebuttal, but it looks like someone already has.

Anthem of California’s requested rate increase on individual policies was actually 20-35 percent. The only way it could get to 39percent would be if a policyholder insisted on a gold-plated Cadillac plan and also happened to move up into a higher age group. […]
He [Obama] complained that in the $1.2 trillion health insurance industry, “the five largest insurers made record profits of over $12 billion.” But that puny sum includes WellPoint’s sale of its pharmacy benefits management company NextRX to Express Scripts for $4.7 billion last April. Adding that $4.7 billion to WellPoint profits is like saying a family’s income rose by $1 million because they sold a million-dollar home. […]

University of Michigan economist Mark Perry calculated that without the sale of NextRX, “WellPoint’s profit margin would have been only 3.9 percent, the industry average profit margin would have been closer to 3percent”— $100 per policy.

But aside from that point, even if a company makes profits, these zany right wingers still believe in the free market because we believe that even when a company makes a profit, the net cost of an item will still be less than a similar item offered by the government.  The profit of a private corporation will typically be less than the inefficiencies produced in a government system.  Profits are also regulated by competition;  the more competitors there are, the lower the prices.  Government has no such competition.

Maybe right-wingers think the way we do because we don’t have knee-jerk reactions every time we hear about companies making a big profit (For one, what is the actual profit margin.  How much is $877 mil compared to total gross?  Profits rose 51% but compared to what?  51% increase from say, 3% is 4.5%)  .  But for the record, we, at least the free-market sort, do not want to “protect” the system.  I want to change the system as well, although not in the same way.

Concerning profits as a whole, people who believe in a free market recognize that people operate based on incentives. We go to work, put in our time, and we expect to get paid. If we do a good job, we get rewarded; if we do a bad job, we can get fired. If I get a raise, I’m happy. Why do we expect everyone else to operate differently?  Granted, sometimes people get rewarded much more exorbitantly than we do.  Frankly, I’m just not worried about those people.


Posted in Capitalism | 13 Comments »

Liquor Wars in Colorado

Posted by Chance on March 29, 2010

Currently in Colorado only 3.2 % beer is allowed in grocery stores.  Many people want this law repealed, so that grocery stores can sell full strength beer, wine, and other forms of alcohol.

Naturally, liquor store owners don’t want this to pass because they fear it will put them out of business.

Here’s the thing.  Government shouldn’t exist to provide an artificial advantage to one business over another.  Out of the multiple reasons to outlaw full strength alcohol in a grocery store, providing an economic advantage to liquor store owners should be the last, yet it seems to be the one argument keeping things the status quo.

A free market works best when it is allowed to provide what the customers want, and jobs are a natural side effect from this.  If people are so concerned about liquor store owners, why not take their logic to the extreme.  Why not outlaw deodorant sales in grocery stores, causing deodorant stores to crop up, giving people an opportunity to own and operate deodorant stores?   Why is that crazy but not our current system?

Posted in Capitalism, Politics | Leave a Comment »